Natural Disasters Are Rare, But So Is Mudslide InsuranceDozens of people lost their homes in the massive slide in Oso, Wash., but few are likely to see an insurance payout. That's because mudslide coverage is not included in a typical homeowner's policy.

Searchers walk near a demolished house in Oso, Wash., in March. Few homeowners in Washington and neighboring Oregon have mudslide insurance.
Elaine Thompson/AP
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Elaine Thompson/AP

Searchers walk near a demolished house in Oso, Wash., in March. Few homeowners in Washington and neighboring Oregon have mudslide insurance.

Elaine Thompson/AP

Depending on whom you talk to, either no one could have predicted the massive mudslide in Oso, Wash., last month — or it was a disaster just waiting to happen. But if homeowners in the slide's path are typical of most people in this part of the country, they were not insured against this kind of event — and are unlikely to see an insurance payout.

That's because standard homeowner's insurance doesn't cover mudslides. And the insurance is not only expensive, it's also difficult to purchase.

"[Coverage] is less than 1 percent in both Oregon and Washington," says Karl Newman, president of the Seattle-based industry group Northwest Insurance Council. He recognizes that number is low for a part of the country prone to mudslides, but it's just not part of a typical homeowner policy.

"There's only one type of policy that you can get for that, and it's called a 'difference in conditions' policy," Newman explains. It's generally not available from your local insurance agent. Instead, you have to buy it from a specialty firm.

Newman likens mudslide insurance to someone buying Jimi Hendrix's old guitar and trying to insure it, or attempting to insure a parade. "You can get that type of insurance that's not something that everyone would experience. So a 'difference in conditions' policy falls in that same category," he says.

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In neighboring Oregon, news of the Washington disaster is sparking an uptick of interest in mudslide insurance. The independent Huggins Insurance agency in Salem is one of the only places in Oregon's hilly capital that can hook property owners up with mudslide coverage.

T.J. Sullivan, a partner with Huggins, says the company's phones have been ringing off the hook.

"These type of events tend to waken people to the fact that things do go wrong and bad things do happen," Sullivan says. "They want to find out, 'Am I covered for this type of an event?' "

The answer is almost always "no." Sullivan walks potential customers through their options, but he says people usually think twice when they hear the cost: upwards of $1,000 per year to insure against mudslides, depending on the value of your home.

After the initial flurry of news coverage of Oso fades, Sullivan says, he doesn't expect much long-term interest in that kind of insurance.

"People probably know somebody who has had a fire in their house," he says. "It's a lot rarer that you actually know somebody who's actually been the victim of a mudslide."

Sullivan says demand would probably be higher if more people understood that their existing house insurance doesn't cover mudslides.

Which begs the question: Why doesn't it?

Ron Fredrickson, manager of consumer advocacy at the state of Oregon's Insurance Division, says it's pretty much insurance 101.

"Insurance is basically risk-sharing," he says. "In order for it to work — and for it to be reasonably affordable — you have to have a large number of similar units that have similar possibilities of loss."

And there simply aren't enough homeowners clamoring for coverage to bring down the cost, Fredrickson says. "If there was demand, I'm quite certain the carriers would step up to the plate."

But for now, mudslide insurance remains a relatively rare phenomenon — just like its namesake, "natural disaster."